Short-term cash flow and financial modelling
Cash, profit and working capital, for the decisions you have to make this year
Most businesses under pressure need three things at once. A cash flow forecast they can trust, week by week. A clear view of which decisions in the next 12 months change the P&L, and by how much. And the cash sitting in working capital that nobody has gone looking for. We build all three with your finance team. A 13-week cash flow forecast and a short-term cash flow forecast (STCF) are two names for the same thing: a weekly, direct-method projection of receipts and payments, usually over the next quarter. If the decision you are facing is several years out, or involves an acquisition or a refinancing, see strategic finance.
What this usually sounds like when you call
- “The forecast says we are fine and the bank balance says we are not.”
- “Our lender wants 13 weeks by Friday and we have never produced one.”
- “We have twelve stores losing money and no agreed way to decide which ones to close.”
- “Profit is fine on paper and we still cannot pay the creditors on time.”
- “The model works but only one person understands it, and she is on leave.”
The common cause is the same. The numbers were built for reporting, not for decisions. They tell you what happened last month. They do not tell you what the bank balance will be in week six, what closing three sites does to next year’s profit, or where two weeks of cash is sitting in the debtors ledger.
What we build
Three things, and most engagements need at least two of them.
A short-term cash flow forecast
A 13-week cash flow forecast on the direct method. Receipts and payments, week by week, from the debtors ledger, the creditors ledger, the payroll calendar and the loan schedule. It reconciles to the opening bank balance and to the closing bank balance. If it does not, we fix that before anything else. Whether your lender calls it a 13-week cash flow or an STCF, this is the document.
A model that keeps working. Built in Excel unless there is a reason not to, with inputs separated from calculations, drivers you can see, and no hardcodes buried in a formula. It accepts a new week of actuals without anyone rebuilding it.
Variance reporting and a weekly rhythm. Forecast against actual, every week, by line. Who updates what, by when, who reviews it, and what the one-page pack looks like. Sales and operations end up seeing the cash effect of what they agreed to, which is usually where behaviour changes.
P&L scenario and sensitivity analysis for the next 12 months
Decision models, not budgets. When the question is "should we close stores, and which ones", "what happens if we drop this product line" or "which of these cost options pays back this year", we build the P&L model that answers it. Each option is a case in the same structure, so the comparison is fair, and each case shows profit, cash and the point at which it stops working.
Site, store and product level analysis. Contribution by location or line, with the shared costs allocated in a way you can defend, and the closure or exit costs included. The output is a ranked list with the numbers behind each rank, not a single recommendation you cannot check.
Sensitivity on the assumptions that matter. We find the two or three inputs that move the answer and show how far each can move before you would choose differently. That number is often more useful than the base case.
| Volume -10% | Volume -5% | Volume base | Volume +5% | Volume +10% | |
|---|---|---|---|---|---|
| Price -10% | 410 | 445 | 480 | 515 | 550 |
| Price -5% | 480 | 515 | 550 | 585 | 620 |
| Price base | 550 | 585 | 620 | 655 | 690 |
| Price +5% | 620 | 655 | 690 | 725 | 760 |
| Price +10% | 690 | 725 | 760 | 795 | 830 |
Scroll to see the full grid.
Working capital optimisation
The cash conversion cycle, down to the accounts. Debtor days, creditor days and stock turns, with the specific customers, suppliers, terms and process steps that drive them. Most businesses have a week or two of cash sitting in a process nobody has looked at.
A prioritised action list. What to change, who owns it, and how much cash it releases by when. Quick wins first: terms that are not being enforced, invoices going out late, stock that is not turning. Then the structural changes that need a conversation with a customer or a supplier.
Tracked in the forecast. Every working capital action goes into the 13-week forecast as a line with an owner, so the cash it releases is visible when it lands and questioned when it does not.
How it is built with your team
We do not disappear for three weeks and return with a file. Your financial controller or analyst sits in the build. They see the ledger extract come in, they see the assumption get set, and they run week two while we watch.
For the P&L analysis, the people who run the sites, products or cost lines are in the working sessions too. They correct our assumptions early, and they can defend the ranking afterwards because they helped build it.
By the end of the engagement, someone in your team has run a full weekly cycle on their own and can rerun a scenario when the facts change. That is the test we use for handover, not whether the model is finished. If your team is thin, say so early. We can run the first few cycles ourselves and hand over later, but we will still be handing over.
What you are left with
- The cash flow model and the scenario model, unlocked, with no password, no macro dependency and no link to anything of ours.
- A one-page instruction sheet for the weekly update, written for the person who does it, not for an auditor.
- The data extract queries or reports, so the inputs can be pulled the same way every week.
- The working capital action list with owners and dates, built into the forecast.
- A recorded walkthrough of the models, so a new hire in a year can learn them without calling us.
- The reporting pack template and the distribution list.
No licence. No subscription. No fee for using a model you paid us to build.
When to call us
A lender, investor or shareholder has asked for a 13-week forecast. These get read carefully and questioned. It is worth having one that survives the questions.
You have to decide which sites, stores or products to keep. The argument is usually about opinions because nobody has put the options side by side with the same assumptions. That is a two to four week piece of work, and it ends the argument.
Cash has stopped behaving the way the P&L says it should. Profit is fine and the account is tight. That gap is a working capital problem with a specific location, and it can be found.
You are within a few months of a funding decision. A facility renewal, a shareholder injection or a covenant reset in the next year. The forecast and the scenarios are the documents the decision is made on. If the funding decision is a full refinancing or is further out, that is strategic finance.
Your forecast depends on one person. If the model only works when one person is in the building, you do not have a forecast. You have a risk.
Common questions about short-term cash flow and financial modelling
What is a 13-week cash flow forecast?
A 13-week cash flow forecast is a week-by-week projection of cash receipts and cash payments over the next quarter, built on the direct method rather than from the profit and loss. It shows the bank balance at the end of every week for 13 weeks. Lenders, investors and boards ask for 13 weeks because a quarter is long enough to show a shortfall in time to do something about it.
Is a short-term cash flow forecast (STCF) the same as a 13-week cash flow?
Yes. Short-term cash flow forecast, STCF and 13-week cash flow are different names for the same tool: a weekly, direct-method forecast of receipts and payments over a short horizon, updated against actuals each week. Advisory firms and lenders tend to say STCF. Boards and finance teams tend to say 13-week. The horizon is sometimes 12, 16 or 26 weeks, but the method does not change.
What should a 13-week cash flow forecast include?
Opening bank balance, customer receipts by week based on the debtors ledger and actual payment behaviour, supplier payments from the creditors ledger and payment runs, payroll and superannuation on their real dates, tax payments, loan repayments and interest, capital spend, and the closing balance for each week. It should also show headroom against any facility limit, and the assumptions behind receipts, because that is where forecasts usually go wrong.
How do you decide which stores or sites to close?
By building the P&L for each site on the same basis, with shared costs allocated in a defensible way and the exit costs included, then ranking them. The ranking is tested against the assumptions that matter most, usually rent, labour and the revenue that transfers to nearby sites, to see which closures still make sense under a worse year. The output is a ranked list with the numbers behind each rank and a short list of sites where the answer depends on one negotiation.
Where does working capital cash usually hide?
In a handful of accounts. Customers on 30-day terms who pay in 55 because nobody chases them, invoices raised a week after delivery, suppliers paid early by default, and stock lines that stopped turning a year ago. Debtor days, creditor days and stock turns show the size of the gap. Finding the cash means going down to the individual customer, supplier and product, which is a few days of analysis, not a project.
How is this different from strategic finance?
Horizon. This service covers the next 12 months: the weekly cash forecast, the decisions that change this year’s profit, and the working capital you can release now. Strategic finance covers the next several years: long-term models tied to the strategy, options when the business needs to change direction, and acquisition and refinancing models. Many clients start here and move to strategic finance once the near-term position is under control.
How long does it take?
A first working cash flow model usually takes two to three weeks, including the time to get clean data out of the ledgers. A site or product P&L analysis takes two to four weeks depending on how many locations and how clean the history is. A working capital review is a few days of analysis and then a few weeks of actions. Handover of the weekly cycle takes another few weeks, because your team runs live cycles with us before we step out.
Do you use our systems or bring your own?
Yours. We build in Excel and pull data from whatever you already run, whether that is Xero, MYOB, NetSuite, SAP or a mix. We do not sell a platform and we do not ask you to move systems. If a Power BI view or a small script makes the weekly update faster, we build it and hand over the source.
Send us your last forecast
If you have a forecast already, send it with your email and we will tell you what we would change. If you have a decision to make about sites, products or costs this year, tell us what it is and when it is due.
Get in touch